Which of the following is true about time lags and fiscal policy?
A)Changes in federal taxes can be implemented easily by the President without the approval of Congress.
B)Changes in fiscal policy that involves changes in government spending on public works projects do not involve significant time lags.
C)Once an appropriate fiscal policy has been determined it can be implemented quickly.
D)The lag time between when a fiscal policy is needed and when it is actually implemented is considerable.
E)None of the above.

Question

Quizplus · Accepted Answer

Time lags refer to the delay between the identification of an economic problem and the implementation of a policy to address it. Fiscal policy changes, particularly those involving legislation, require time to be passed by both houses of Congress and may also face opposition from various interest groups, resulting in significant delays. Therefore, the time lag between the need for fiscal policy and its implementation is considerable. Choices A, B, and C are incorrect because they do not accurately reflect the reality of time lags involved in fiscal policy implementation.

Which of the Following Is True About Time Lags and Fiscal